QuarkChain Whitepaper

Wednesday, June 13, 2018
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June 2, 2018 ! RISK!FACTORS! The$ acquisition$ of$ virtual$ currency$ or$ tokens,$ including$ QKC$ issued$ by$ as$ set$ forth$ in$ this$ Whitepaper,$ involves$ a$ high$ degree$ of$ risk,$ including$ but$ not$ limited$ to$ the$ risks$ described$ below.$Prior$to$any$purchase$of$QKC,$prospective$participants$(“Prospective!Participants”$or$ “you”)$should$carefully$consider$the$following$risk$factors$and$the$other$information$contained$ in$ this$ Whitepaper.$ In$ particular,$ Prospective$ Participants$ should$ carefully$ consider$ and$ evaluate$ all$ risks$ and$ uncertainties$ associated$ with$ the$ current$ initial$ coin$ offering$ (the$ “QuarkChain!ICO”)$and$the$sale$and$purchase$of$QKC.$ The$risks$described$below$are$not$the$only$ones$we$face.$Additional$risks$not$presently$known$ to$ us$ may$ also$ adversely$ affect$ the$ QuarkChain$ Network$ should$ such$ risks$ subsequently$ materialize.$ If$ any$ of$ the$ following$ risks$ actually$ occur,$ the$ maintenance$ and$ level$ of$ usage$ of$ QKC$may$be$severely$affected$as$well.$In$such$cases,$the$trading$price$of$QKC$(in$the$event$they$ are$listed$on$cryptocurrency$exchange(s))$may$decline$due$to$the$materialization$of$such$risks.$ As$a$result,$you$may$lose$all$or$part$of$your$investment.$$ This$Whitepaper$also$contains$forwardJlooking$statements$that$involve$risks$and$uncertainties.$ The$ actual$ results$ could$ differ$ materially$ from$ those$ anticipated$ in$ such$ forwardJlooking$ statements$as$a$result$of$certain$factors,$including$the$risks$faced$by$us$described$below.! RISKS!RELATED!TO!PARTICIPATION!IN!THE!QUARKCHAIN!ICO!! The!QUARKCHAIN!ICO!may!not!result!in!an!active!or!liquid!market!for!QKC! • There$ is$ currently$ no$ public$ market$ for$ QKC.$ While$ the$ Foundation$ (and$ its$ affiliates)$ will$ use$ reasonable$ endeavours$ to$ seek$ the$ admission$ of$ QKC$ for$ trading$ on$ cryptocurrency$ exchange(s),$ there$ is$ no$ guarantee$ that$ QKC$ will$ receive$ approval$ for$ admission$to$trading$on$any$such$cryptocurrency$exchange(s).$$ • Furthermore,$even$if$QKC$are$admitted$to$trading$by$cryptocurrency$exchange(s),$there$ is$no$guarantee$that$an$active$or$liquid$market$for$QKC$will$ultimately$develop$or$even$if$ it$develops,$will$be$sustained.$It$should$also$be$noted$that$QKC$have$no$known$potential$ uses$outside$of$the$QuarkChain$Network.$ There!is!no!assurance!as!to!profitability!in!participating!in!the!QUARKCHAIN!ICO! • There$is$no$assurance$that$the$value$of$QKC$may$increase$over$time.$In$particular,$there$ is$ no$ guarantee$ that$ the$ market$ price$ of$ QKC$ will$ reach$ or$ exceed$ the$ original$ participation$price$paid$for$QKC$in$the$initial$QKC$sale$pursuant$to$the$QuarkChain$ICO.$$ The!value!of!QKC!may!fluctuate!and!be!volatile! • The$ virtual$ currency$ markets$ are$ often$ volatile$and$ suffer$ from$ periods$ of$ limited$ liquidity.$ Once$ purchased,$ the$ value$ of$ QKC$ may$ be$ influenced$ by$ digital$ currency$ market$ trends,$ exchange$ rate$ volatility$ and$ other$ factors.$ The$ majority$ of$ such$ events$ are$ unpredictable$ and$ are$ not$ within$ the$ control$ of$ the$ Foundation$ (and$ its$ affiliates).$ 1

June 2, 2018 This$may$correspondingly$cause$the$value$of$QKC$to$significantly$fluctuate$over$periods$ of$time.$$ • Additionally,$outside$of$seeking$a$listing$on$cryptocurrency$exchange(s),$the$Foundation$ (and$its$affiliates)$does$not$and$has$no$intention$to$take$any$further$action$regarding$the$ subsequent$ trading$ and$ circulation$ of$ QKC.$ Any$ subsequent$ trading$ of$ QKC$ will$ be$ determined$ on$ a$ willingJbuyer,$ willingJseller$ basis,$ based$ on$ the$ relevant$ parties’$ reaching$ a$ consensus$ on$ its$ value.$ At$ no$ point$ does$ any$ party$ guarantee$ the$ liquidity$ and/or$the$market$value$of$QKC.$$ There! is! no! assurance! that! the! Foundation! (and! its! affiliates)! will! obtain! the! necessary! funds!from!the!offering!of!QKC!proceeds! • The$QuarkChain$ICO$may$not$reach$the$target$sale$amount$and$as$such,$the$Foundation$ (and$its$affiliates)$may$not$have$sufficient$funds$to$execute$its$plans$and/or$operate$the$ QuarkChain$ Network,$ which$ may$ correspondingly$ materially$ and$ adversely$ affect$ the$ business,$ financial$ condition,$ reputation,$ results$ of$ operations$ and$ prospects$ of$ the$ QuarkChain$ Network.$ This$ may$ also$ result$ in$ the$ failure$ to$ create$ the$ necessary$ momentum$ and$ increased$ usage$ of$ the$ QuarkChain$ Network,$ which$ may$ consequently$ result$in$a$decline$in$the$value$of$QKC.$ Future!sales!or!issuances!of!QKC!could!materially!and!adversely!affect!the!market!price!of! QKC!! • Any$future$sales$and/or$issuances$or$simply$the$perception$that$such$future$sales$and/or$ issuances$of$QKC$may$occur,$could$have$a$material$and$adverse$impact$on$the$value$of$ QKC.$ Negative!publicity!may!materially!and!adversely!affect!the!price!of!QKC!! • Any$ negative$ publicity,$ whether$ justified$ or$ not,$ involving$ the$ Foundation$ (and$ its$ affiliates),$ the$ QuarkChain$ Network,$ QKC$ and/or$ any$ key$ personnel$ of$ the$ QuarkChain$ Team$may$similarly$have$a$material$and$adverse$impact$on$the$value$of$QKC.$ RISKS!RELATED!TO!REGULATION!AND!TO!THE!VIRTUAL!CURRENCY!INDUSTRY! The!laws!applicable!to!QKC!and!their!future!development!are!divergent!and!emerging! • The$regulatory$status$of$QKC$and$distributed$ledger$technology$is$unclear$or$unsettled$in$ many$ jurisdictions.$ In$ particular,$ the$ virtual$ currency$ or$ token$ economy$ is$ completely$ novel$and$subject$to$a$divergent$and$rapidly$changing$regulatory$environment.$There$is$ currently$ an$ underdeveloped$ yet$ rapidly$ emerging$ body$ of$ law$ internationally$ governing$this$area.$The$regulation$of$virtual$currencies$has$become$a$primary$target$of$ regulation$in$all$major$countries$in$the$world.$It$is$impossible$to$predict$how,$when$or$ whether$ regulatory$ agencies$ may$ apply$ existing$ regulations$ or$ create$ new$ regulations$ with$ respect$ to$ such$ technology$ and$ its$ applications,$ including$ QKC$ and/or$ the$ QuarkChain$ Network.$ Regulatory$ actions$ could$ negatively$ impact$ QKC$ and/or$ the$ QuarkChain$ Network$ in$ various$ ways.$ In$ particular,$ it$ is$ possible$ that$ such$ emerging$ 2

June 2, 2018 laws$ and$ regulations$ could$ result$ in$ unexpected$ transfer$ and/or$ other$ forms$ of$ restrictions$being$imposed$on$QKC.$ • The$Foundation$(or$its$affiliates)$may$cease$operations$in$a$jurisdiction$in$the$event$that$ regulatory$ actions,$ or$ changes$ to$ law$ or$ regulation,$ make$ it$ illegal$ to$ operate$ in$ such$ jurisdiction,$or$commercially$undesirable$to$obtain$the$necessary$regulatory$approval(s)$ to$operate$in$such$jurisdiction.$After$consulting$with$a$wide$range$of$legal$advisors$and$ continuous$ analysis$ of$ the$ development$ and$ legal$ structure$ of$ virtual$ currencies,$ the$ Foundation$ (or$ its$ affiliates)$ will$ apply$ a$ cautious$ approach$ towards$ the$ sale$ of$ QKC.$ Therefore,$for$the$token$sale,$the$Foundation$(or$its$affiliates)$may$constantly$adjust$the$ sale$strategy$in$order$to$avoid$relevant$legal$risks$as$much$as$possible.$ • QKC$may$not$be$resold$to$persons$who$are$residents$of$other$jurisdiction(s)$where$the$ purchase$ of$ QKC$ may$ be$ in$ violation$ of$ the$ applicable$ laws$ of$ the$ relevant$ jurisdiction(s).$ Accordingly,$ the$ Foundation$ (and$ its$ affiliates)$ cannot$ guarantee$ there$ will$be$sufficient$demand$or$liquidity$for$QKC$after$they$have$been$admitted$to$trading$ on$cryptocurrency$exchange(s).$$ • While$ the$ operation$ of$ the$ QuarkChain$ Network$ is$ currently$ not$ subject$ to$ any$ regulatory$ licence$ requirements$ under$ any$ applicable$ laws.$ However,$ over$ time,$ the$ applicable$ laws$ may$ change.$ As$ a$ result,$ the$ QuarkChain$ Network$ may$ need$ to$ adapt,$ and$ (a)$ incur$ more$ costs$ to$ comply$ with$ regulatory$ requirements;$ (b)$ temporarily$ suspend$business$in$order$to$comply$with$such$requirements;$or$(c)$modify$the$manner$ in$which$it$conducts$its$business$in$the$applicable$jurisdiction.$$ Uncertain!tax!consequences!relating!to!an!investment!in!QKC! • Currently,$ the$ tax$ characterization$ of$ the$ purchase$ and$ sale$ of$ QKC$ pursuant$ to$ applicable$ laws$ is$ uncertain.$ However,$ given$ the$ advent$ of$ technology,$ the$ relevant$ regulatory$bodies$may$ultimately$choose$to$tax$the$sale$and$purchase$of$QKC.$This$may$ lead$ to$ a$ reduction$ in$ the$ value$ of$ QKC$ in$ addition$ to$ you$ being$ made$ subject$ to$ tax$ obligations.$ It$ is$ your$ sole$ responsibility$ to$ comply$ with$ the$ tax$ laws$ of$ the$ jurisdiction(s)$applicable$to$you.$ The! use! of! experimental! technology! carries! operational,! technological,! regulatory,! financial!and!reputational!risks! • The$ QuarkChain$ Network$ relies$ on,$ amongst$ other$ technology,$ blockchainJbased$ software$systems$and$smart$contract$technology,$and$QKC$use$cryptocurrency$wallets$or$ other$related$token$storage$mechanisms.$The$technology$is$experimental$and$in$a$pilot$ stage$of$development.$The$technology$may$be$made$subject$to$existing$laws$not$initially$ meant$ for$ said$ technology,$ or$ new$ regulations$ regarding$ blockchain$ technologyJbased$ applications$may$be$introduced.$Such$newly$introduced$laws$and$regulations$may$cause$ issues$ and/or$ conflict$ with$ the$ current$ QuarkChain$ Network$ concept,$ which$ may$ ultimately$ result$ in$ the$ need$ to$ make$ substantial$ modifications$ to,$ and/or$ lead$ to$ the$ potential$ suspension$ or$ termination$ of$ some$ or$ all$ of$ the$ functions$ on$ the$ QuarkChain$ Network.$ There$ is$ correspondingly$ no$ guarantee$ that$ the$ services$ and$ projects$ described$ in$ this$ Whitepaper$ will$ not$ need$ to$ be$ adjusted$ or$ modified$ in$ certain$ 3

June 2, 2018 countries$ because$ of$ the$ then$ regulatory$ environment.$ It$ also$ cannot$ be$ ruled$ out$ that$ some$services$will$be$impossible$to$provide$in$certain$jurisdictions.$ No!offer!of!securities!or!registration!! • The$ offer$ of$ QKC$ pursuant$ to$ this$ Whitepaper$ is$ not$ intended$ to$ constitute$ an$ offer$ of$ securities$or$a$solicitation$for$investment$in$securities$in$any$jurisdiction.$$ • No$regulatory$authority$has$examined$or$approved$of$any$of$the$information$set$out$in$ this$Whitepaper.$Additionally,$no$such$action$has$been$or$will$be$taken$under$the$laws$ and$regulations$of$any$jurisdiction.$ • In$the$event$that$the$Foundation$(and$its$affiliates)$chooses$to$comply$with$the$securities$ laws$and/or$an$applicable$exemption$from$securities$registration$or$other$obligations$in$ any$ jurisdiction,$ such$ compliance$ shall$ be$ without$ prejudice$ to$ any$ position$ of,$ or$ assertion$by,$he$Foundation$(and$its$affiliates)$that$QKC$are$not$securities.$ RISKS! RELATED! TO! SECURITY,! CYBERSECURITY,! AND! THE! HANDLING! OF! PERSONAL! DATA! Dependence!on!computer!infrastructure! • We$are$highly$dependent$on$information$technology.$We$are$also$subject$to$hacking$or$ other$attacks$on$our$IT$systems.$As$such,$a$system$failure$would$have$an$adverse$effect$ on$ the$ use$ of$ the$ platform.$ Despite$ the$ intended$ implementation$ of$ all$ reasonable$ network$ security$ measures,$ the$ processing$ center$ servers$ are$ vulnerable$ to$ computer$ viruses,$ physical$ or$ electronic$ breakJins$ or$ other$ disruptions$ of$ a$ similar$ nature.$ Computer$viruses,$breakJins$or$other$disruptions$caused$by$third$parties$may$result$in$ interruption,$ delay$ or$ suspension$ of$ services,$ which$ would$ limit$ the$ use$ of$ the$ QuarkChain$Network.! • Additionally,$ hackers$ or$ other$ malicious$ groups$ or$ organisations$ may$ attempt$ to$ interfere$with$QKC$and/or$the$QuarkChain$Network$in$a$variety$of$ways,$including,$but$ not$limited$to,$malware$attacks,$denial$of$service$attacks,$consensusJbased$attacks,$Sybil$ attacks,$ smurfing$ and$ spoofing.$ Furthermore,$ there$ is$ a$ risk$ that$ a$ third$ party$ or$ a$ member$ of$ the$ Foundation$ (and$ its$ affiliates)$ may$ intentionally$ or$ unintentionally$ introduce$ weaknesses$ into$ the$ core$ infrastructure$ of$ QKC$ and/or$ the$ QuarkChain$ Network,$which$could$negatively$affect$QKC$and/or$the$QuarkChain$Network.$ • Further,$ the$ future$ of$ cryptography$ and$ security$ innovations$ are$ highly$ unpredictable$ and$ advances$ in$ cryptography,$ or$ technical$ advances$ (including$ without$ limitation$ development$of$quantum$computing),$could$present$unknown$risks$to$QKC$and/or$the$ QuarkChain$Network$by$rendering$ineffective$the$cryptographic$consensus$mechanism$ that$underpins$that$blockchain$protocol.$ $ Potential!loss!of!digital!currencies!and!wallet!risks! 4

June 2, 2018 • While$the$Foundation$(and$its$affiliates)$will$implement$reasonable$security$measures$to$ ensure$ that$ QKC$ can$ be$ securely$ held$ by$ the$ respective$ users,$ there$ is$ however$ no$ assurance$ that$ there$ will$ be$ no$ theft$ of$ QKC$ as$ a$ result$ of$ hacks,$ sophisticated$ cyberJ attacks,$denial$of$service$or$errors,$and/or$vulnerabilities$or$defects$arising$from$our$IT$ systems.! Malfunction,!breakdown!or!abandonment!of!experimental!technology!! • As$ QKC$ are$ based$ on$ the$ blockchain$ protocol,$ any$ malfunction,$ breakdown$ and$ abandonment$ of$ the$ blockchain$ protocol$ may$ have$ material$ adverse$ consequences$ for$ QKC.$Additionally,$QKC$remain$subject$to$technical$advances,$such$as$the$development$of$ quantum$computing,$which$could$present$risks$to$QKC$and$the$QuarkChain$Network.$ Risk!of!Mining!Attacks!! • As$with$other$decentralized$cryptographic$tokens$based$on$the$blockchain$protocol,$QKC$ are$susceptible$to$attacks$by$miners$in$the$course$of$validating$QKC$transactions$on$the$ blockchain.$Successful$mining$attacks$present$a$risk$to$QKC,$including,$but$not$limited$to$ accurate$execution$and$recording$of$transactions$involving$QKC.$ Disclosure!of!information!! • Personal$ information$ received$ from$ QKC$ holders,$ including$ but$ not$ limited$ to,$ the$ number$of$QKC$owned,$wallet$addresses$used,$and$any$other$relevant$information$may$ be$disclosed$to$law$enforcement,$government$officials,$and$other$relevant$third$parties$ when$ the$ Foundation$ (and$ its$ affiliates)$ is$ required$ to$ disclose$ such$ information$ pursuant$to$any$applicable$law,$subpoena$or$court$order$received.$At$no$time$shall$the$ Foundation$(and$its$affiliates)$be$held$responsible$for$such$information$disclosure.$ • Additionally,$as$at$the$date$hereof,$the$QuarkChain$Network$is$still$under$development$ and$its$design$concepts,$consensus$mechanisms,$algorithms,$codes,$and$other$technical$ details$ and$ parameters$ may$ be$ constantly$ and$ frequently$ updated$ and$ changed.$ Although$ this$ Whitepaper$ contains$ the$ most$ current$ information$ relating$ to$ the$ QuarkChain$ Network,$ it$ is$ not$ absolutely$ complete$ and$ may$ still$ be$ adjusted$ and$ updated$by$the$QuarkChain$team$from$time$to$time.$The$QuarkChain$team$has$no$ability$ and$obligation$to$keep$holders$of$QKC$informed$of$every$detail$(including$development$ progress$ and$ expected$ milestones)$ regarding$ the$ project$ to$ develop$ the$ QuarkChain$ Network,$hence$insufficient$information$disclosure$is$inevitable$and$reasonable.$ Risks!Associated!with!KYC! • The$ Foundation$ (and$ its$ affiliates)$ reserves$ the$ right$ to$ conduct$ further$ “know$ your$ client”$ assessment$ (KYC)$ on$ all$ Prospective$ Participants.$ Such$ KYC$ may$ be$ conducted$ following$ the$ receipt$ of$ funds$ from$ Prospective$ Participants$ of$ QKC$ in$ the$ QuarkChain$ ICO.$ In$ the$ event$ KYC$ is$ not$ satisfied$ (as$ determined$ by$ the$ Foundation$ (and$ its$ affiliates),$in$its$sole$discretion),$the$Foundation$(and$its$affiliates)$$may$return$any$such$ funds$and$refuse$to$issue$QKC$to$such$Prospective$Participants.$$ 5

June 2, 2018 There!may!be!a!security!breach!on!the!QuarkChain!Network! • Even$though$all$the$data$provided$to$the$Foundation$(and$its$affiliates)$is$encrypted$and$ stored$ in$ a$ secure$ computing$ environment$ protected$ by$ secure$ firewalls$ to$ prevent$ unauthorised$ access,$ in$ the$ event$ that$ there$ is$ a$ security$ breach$ on$ the$ QuarkChain$ Network,$ there$ is$ a$ risk$ that$ there$ may$ be$ a$ loss$ of$ users$ personal$ data.$ This$ could$ materially$ and$ adversely$ affect$ the$ business,$ financial$ condition,$ reputation,$ results$ of$ operations$and$prospects$of$the$QuarkChain$Network.$ • Hackers$ or$ other$ people$ engaging$ in$ similar$ forms$ of$ criminal$ activity$ may$ attempt$ to$ steal$ QKC$ and$ money$ raised$ from$ the$ QuarkChain$ ICO$ which$ would$ result$ in$ the$ Foundation$ (and$ its$ affiliates)$ not$ having$ the$ required$ funds$ to$ develop$ and$ grow$ its$ business.$The$Foundation$(and$its$affiliates)$has$comprehensive$security$precautions$to$ safeguard$QKC$and$money$it$raises$from$the$QuarkChain$ICO.$However,$in$the$event$that$ such$ a$ breach$ takes$ place,$ this$ could$ materially$ and$ adversely$ affect$ the$ business,$ financial$condition,$results$of$operations$and$prospects$of$the$QuarkChain$Network.! RISKS!RELATED!TO!THE!QUARKCHAIN!NETWORK! Intellectual!property!rights!claims!may!adversely!affect!the!operation!of!the!QuarkChain! Network! • Third$ parties$ may$ assert$ intellectual$ property$ claims$ relating$ to$ the$ Foundation’s$ (and$ its$ affiliates)$ intellectual$ property$ rights.$ Regardless$ of$ the$ merit$ of$ any$ intellectual$ property$ or$ other$ legal$ action,$ any$ threatened$ action$ that$ reduces$ confidence$ in$ the$ QuarkChain’s$ Network’s$ longJterm$ viability$ or$ the$ ability$ of$ users$ to$ use$ the$ platform$ may$adversely$affect$the$value$of$QKC.$$ Dependence!on!Management!! • The$ Foundation’s$ (and$ its$ affiliates)$ intends$ to$ rapidly$ and$ significantly$ expand$ its$ operations$and$it$anticipates$that$significant$expansion$of$its$operations$will$continue$to$ be$ required$ in$ order$ to$ provide$ market$ opportunities$ and$ attract$ market$ participants,$ which$ is$ necessary$ to$ provide$ market$ liquidity.$ The$ anticipated$ rapid$ growth$ may$ present$ unique$ challenges$ to$ the$ Foundation$ (and$ its$ affiliates)$ management,$ operational,$ and$ financial$ resources.$ The$ success$ of$ the$ QuarkChain$ Network$ is$ dependent$on$its$current$management$personnel$for$the$operation$of$its$business.$$ Loss!of!Talent$ • The$development$of$the$QuarkChain$Network$depends$on$the$continued$coJoperation$of$ the$ existing$ technical$ team$ and$ expert$ consultants,$ who$ are$ highly$ knowledgeable$ and$ experienced$in$their$respective$sectors.$The$loss$of$any$member$may$adversely$affect$the$ QuarkChain$ Network$ or$ its$ future$ development.$ Further,$ stability$ and$ cohesion$ within$ the$team$is$critical$to$the$overall$development$of$the$QuarkChain$Network.$There$is$the$ possibility$that$conflict$within$the$team$and/or$departure$of$core$personnel$may$occur,$ resulting$in$negative$influence$on$the$project$in$the$future.$ 6

June 2, 2018 Competitors! • Various$ types$ of$ decentralised$ applications$ are$ emerging$ at$ a$ rapid$ rate,$ and$ the$ industry$ is$ increasingly$ competitive.$ It$ is$ possible$ that$ alternative$ networks$ could$ be$ established$ that$ utilise$ the$ same$ or$ similar$ code$ and$ protocol$ underlying$ QKC$ and/or$ the$ QuarkChain$ Network$ and$ attempt$ to$ reJcreate$ similar$ facilities.$ The$ QuarkChain$ Network$ may$ be$ required$ to$ compete$ with$ these$ alternative$ networks,$ which$ could$ negatively$impact$QKC$and/or$the$QuarkChain$Network.$ Force!Majeure! • The$ QuarkChain$ Network$ may$ be$ interrupted,$ suspended$ or$ delayed$ due$ to$ force$ majeure$circumstances.$For$the$purposes$of$this$Whitepaper,$force$majeure$shall$mean$ extraordinary$events$and$circumstances$which$could$not$be$prevented$and$shall$include$ acts$of$nature,$wars,$armed$conflicts,$mass$civil$disorders,$industrial$actions,$epidemics,$ lockouts,$ slowdowns,$ prolonged$ shortage$ or$ other$ failures$ of$ energy$ supplies$ or$ communication$service,$acts$of$municipal,$state$or$federal$governmental$agencies,$other$ circumstances$ beyond$ the$ Foundation’s$ (and$ its$ affiliates)$ control,$ which$ were$ not$ in$ existence$at$the$time$of$the$release$of$the$Whitepaper.$ There!is!no!assurance!of!any!success!of!the!QuarkChain!Network! • The$demand$for,$and$the$value$of$QKC$is$heavily$dependent$on$the$performance$of$the$ QuarkChain$Network.$In$particular,$there$is$no$guarantee$that$the$QuarkChain$Network$ will$ gain$ traction$ and$ achieve$ success$ after$ the$ commencement$ of$ operations.$ In$ the$ event$ that$ the$ success$ of$ QuarkChain$ Network$ does$ not$ eventually$ materialize,$ this$ would$likely$have$a$negative$impact$on$the$value$of$QKC.$$ • Additionally,$there$is$the$risk$that$the$development$of$the$QuarkChain$Network$will$not$ be$ executed$ or$ implemented$ as$ planned,$ for$ a$ variety$ of$ reasons,$ including$ without$ limitation$ the$ event$ of$ a$ decline$ in$ the$ prices$ of$ any$ digital$ asset,$ virtual$ currency$ or$ QKC,$unforeseen$technical$difficulties,$and$shortage$of$development$funds$for$activities.$ Disclaimer!of!liability!! • To$the$maximum$extent$permitted$by$applicable$laws,$regulations$and$rules,$neither$the$ Foundation$ (and$ its$ affiliates)$ nor$ its$ respective$ past,$ present$ and$ future$ employees,$ officers,$ directors,$ advisors,$ parent$ companies,$ subsidiaries,$ affiliates,$ agents,$ representatives,$ predecessors,$ successors$ and$ assigns$ $ shall$ be$ liable$ for$ any$ indirect,$ special,$ incidental,$ consequential$ or$ other$ losses$ of$ any$ kind,$ in$ tort,$ contract$ or$ otherwise$(including$but$not$limited$to$loss$of$revenue,$income$or$profits,$and$loss$of$use$ or$ data),$ arising$ out$ of$ or$ in$ connection$ with$ any$ acceptance$ of,$ or$ reliance$ on$ this$ Whitepaper$or$any$part$thereof$by$you.$ $ No!Representations!and!Warranties!! 7

June 2, 2018 • The$ Foundation$ (and$ its$ affiliates)$ does$ not$ make$ nor$ purport$ to$ make,$ and$ hereby$ disclaims,$any$representation,$warranty$or$undertaking$in$any$form$whatsoever$to$any$ entity$ or$ person,$ including$ any$ representation,$ warranty$ or$ undertaking$ in$ relation$ to$ the$ truth,$ accuracy$ and$ completeness$ of$ any$ of$ the$ information$ set$ out$ in$ this$ Whitepaper.$ Unanticipated!Risks! • Cryptographic$tokens$such$as$QKC$are$a$new$and$untested$technology.$In$addition$to$the$ risks$ included$ above$ in$ this$ list$ of$ risk$ factors,$ there$ exist$ other$ risks$ associated$ with$ participation,$possession$and$use$of$QKC,$including$unanticipated$risks.$Such$risks$may$ subsequently$ materialize$ as$ unanticipated$ variations$ or$ combinations$ of$ the$ risks$ discussed$ in$ this$ list$ of$ risk$ factors.$ The$ potential$ risks$ mentioned$ above$ are$ not$ exhaustive$ and$ there$ are$ other$ risks$ (as$ more$ particularly$ set$ out$ in$ the$ Terms$ and$ Conditions)$associated$with$your$purchase,$holding$and$use$of$QKC,$including$those$that$ the$Foundation$(and$its$affiliates)$cannot$anticipate.$Such$risks$may$further$materialise$ as$ unanticipated$ variations$ or$ combinations$ of$ the$ aforementioned$ risks.$ You$ should$ conduct$full$due$diligence$on$the$Foundation,$its$affiliates$and$the$QuarkChain$team,$as$ well$ as$ understand$ the$ overall$ framework,$ mission$ and$ vision$ for$ the$ QuarkChain$ Network$prior$to$purchasing$QKC.$ $ 8

ADDITIONAL GENERAL DISCLAIMERS To the maximum extent permitted by the applicable laws, regulations and rules, Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, shall not be liable for any indirect, special, incidental, consequential or other losses of any kind, in tort, contract or otherwise (including but not limited to loss of revenue, income or profits, and loss of use or data), arising out of or in connection with any acceptance of or reliance on this Whitepaper or any part thereof by you. By accessing and/or accepting possession of any information in this Whitepaper or such part thereof (as the case may be), you represent and warrant to Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, as follows: (a) you agree and acknowledge that the QKC do not constitute securities in any form in any jurisdiction; (b) you agree and acknowledge that this Whitepaper does not constitute a prospectus or offer document of any sort and is not intended to constitute an offer of securities in any jurisdiction or a solicitation for investment in securities and you are not bound to enter into any contract or binding legal commitment and no cryptocurrency or other form of payment is to be accepted on the basis of this Whitepaper; (c) you agree and acknowledge that no regulatory authority has examined or approved of the information set out in this Whitepaper, no action has been or will be taken under the laws, regulatory requirements or rules of any jurisdiction and the publication, distribution or dissemination of this Whitepaper to you does not imply that the applicable laws, regulatory requirements or rules have been complied with; (d) you agree and acknowledge that this Whitepaper, the undertaking and/or the completion of the QuarkChain Initial Token Sale, or future trading of the QKC on any cryptocurrency exchange, shall not be construed, interpreted or deemed by you as an indication of the merits of the Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor. (e) the distribution or dissemination of this Whitepaper, any part thereof or any copy thereof, or acceptance of the same by you, is not prohibited or restricted by the applicable laws, regulations or rules in your jurisdiction, and where any restrictions in relation to possession are applicable, you have observed and complied with all such restrictions at your own expense and without liability to Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor; (f) you agree and acknowledge that in the case where you wish to purchase any QKC, the QKC tokens are not to be construed, interpreted, classified or treated as: (i) any kind of currency other than cryptocurrency; (ii) debentures, stocks or shares issued by any person or entity (whether Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor) (i) rights, options or derivatives in respect of such debentures, stocks or shares; (ii) rights under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss; (iii) units in a collective investment scheme; (iv) units in in a business trust; (v) derivatives of units in a business trust; or (vi) any other security or class of securities. (g) you have a basic degree of understanding of the operation, functionality, usage, storage, transmission mechanisms and other material characteristics of cryptocurrencies, blockchain-based software systems, cryptocurrency wallets or other related token storage mechanisms, blockchain technology and smart contract technology; (h) you are fully aware and understand that in the case where you wish to purchase any QKC, there are risks associated with Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor and their respective business and operations, the QKC, the Initial Token Sale; (i) you agree and acknowledge that neither Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, is liable for any indirect, special,

incidental, consequential other losses of any kind, in tort, contract or otherwise (including but not limited to loss of revenue, income or profits, and loss of use or data), arising out of or in connection with any acceptance of or reliance on this Whitepaper or any part thereof by you; and (j) all of the above representations and warranties are true, complete, accurate and non-misleading from the time of your access to and/or acceptance of possession this Whitepaper or such part thereof (as the case may be). FORWARD LOOKING STATEMENTS AND RELATED MATTERS All statements contained in this Whitepaper, statements made in press releases or in any place accessible by the public and oral statements that may be made by Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, or their respective directors, executive officers or employees acting on behalf of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd. or the Distributor (as the case may be), that are not statements of historical fact, constitute “forwardlooking statements”. Some of these statements can be identified by forward-looking terms such as “aim”, “target”, “anticipate”, “believe”, “could”, “estimate”, “expect”, “if”, “intend”, “may”, “plan”, “possible”, “probable”, “project”, “should”, “would”, “will” or other similar terms. However, these terms are not the exclusive means of identifying forward- looking statements. . All statements regarding Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor’s financial position, business strategies, plans and prospects and the future prospects of the industry which Quarktech Ltd., QuarkChain Inc., QuarkChain Foundation Ltd. and/or the Distributor is in are forward-looking statements. These forward-looking statements, including but not limited to statements as to Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor’s revenue and profitability, prospects, future plans, other expected industry trends and other matters discussed in this Whitepaper that are not historic facts, but only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual future results, performance or achievements of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, to be materially different from any future results, performance or achievements expected, expressed or implied by such forward-looking statements. These factors include, amongst others: (a) changes in political, social, economic and stock or cryptocurrency market conditions, and the regulatory environment in the countries in which Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, conducts its respective businesses and operations; (b) the risk that Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, may be unable or execute or implement their respective business strategies and future plans; (c) changes in interest rates and exchange rates of fiat currencies and cryptocurrencies; (d) changes in the anticipated growth strategies and expected internal growth of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor; (e) changes in the availability and fees payable to Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, in connection with their respective businesses and operations; (f) changes in the availability an salaries of employees who are required by Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor to operate their respective businesses and operations; (g) changes in preferences of customers Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd

and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor; (h) changes in competitive conditions under which QuarkChain Foundation Ltd.’s and/or any companies or entities so associated directly or indirectly with Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, to compete under such conditions; (i) changes in the future capital needs of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, and the availability of financing and capital to fund such needs; (j) war or acts of international or domestic terrorism; (k) occurrences of catastrophic events, natural disasters and acts of God that affect the businesses and/or operations of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor; (l) other factors beyond the control of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor; and (m) any risk and uncertainties associated with Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor and their businesses and operations, the QKC tokens, the Initial Token Sale (each as referred to in the Whitepaper). All forward-looking statements made by or attributable to Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor are expressly qualified in their entirety by such factors. Given that risks and uncertainties that may cause the actual future results, performance or achievements of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor to be materially different from that expected, expressed or implied by the forward-looking statements in this Whitepaper, undue reliance must not be placed on these statements. These forward-looking statements are applicable only as of the date of this Whitepaper. Neither Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, nor any other person represents, warrants and/or undertakes that the actual future results, performance or achievements of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, will be as discussed in those forward-looking statements. The actual results, performance or achievements of Quarktech Ltd., QuarkChain Inc., and/or the Distributor may differ materially from those anticipated in these forwardlooking statements. Nothing contained in this Whitepaper is or may be relied upon as a promise, representation or undertaking as to the future performance or policies of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor. Further, Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, disclaim any responsibility to update any of those forwardlooking statements or publicly announce any revisions to those forward-looking statements to reflect future developments, events or circumstances, even if new information becomes available or other events occur in the future. USE OF INFORMATION AND INFORMATION CONTAINED IN THIS DOCUMENT This Whitepaper includes market and industry information and forecasts that have been obtained from internal surveys, reports and studies, where appropriate, as well as market research, publicly available information and industry publications. Such surveys, reports, studies, market research, publicly available information and publications generally state that the information that they contain has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of

such included information. Save for Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, and their respective directors, executive officers and employees, no person has provided his or her consent to the inclusion of his or her name and/or other information attributed or perceived to be attributed to such person in connection therewith in this Whitepaper and no representation, warranty undertaking is or purported to be provided as to the accuracy or completeness of such information by such person and such persons shall not be obliged to provide any updates on the same. While Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or Quarktech members have taken reasonable actions to ensure that the information is extracted accurately and in its proper context, Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor and/or the QuarkChain members have not conducted any independent review of the information extracted from third party sources, verified the accuracy or completeness of such information or ascertained the underlying economic assumptions relied upon therein. Consequently, neither Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Quarktech members, nor their respective directors, executive officers and employees acting on their behalf makes any representation or warranty as to the accuracy or completeness of such information and shall not be obliged to provide any updates on the same. To facilitate a better understanding of the QKC being offered for purchase by the Distributor, and the businesses and operations of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, certain technical terms and abbreviations, as well as, in certain instances, their descriptions, have been used in this Whitepaper. These descriptions and assigned meanings should not be treated as being definitive of their meanings and may not correspond to standard industry meanings or usage. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include corporations. No information in this Whitepaper should be considered to be business, legal, financial or tax advice regarding Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor, the QKC tokens, the Initial Token Sale exchange (each as referred to in the Whitepaper). You should consult your own legal, financial, tax or other professional adviser regarding Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor and their respective businesses and operations, the QKC, the Initial Token Sale, (each as referred to in the Whitepaper). You should be aware that you may be required to bear the financial risk of any purchase of QKC for an indefinite period of time. No person has been or is authorised to give any information or representation not contained in this Whitepaper in connection with Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor and their respective businesses and operations, the QKC tokens, the Initial Token Sale, (each as referred to in the Whitepaper) and, if given, such information or representation must not be relied upon as having been authorised by or on behalf of Quarktech Ltd. and/or the Distributor. The Initial Token Sale (as referred to in the Whitepaper) shall not, under any circumstances, constitute a continuing representation or create any suggestion or implication that there has been no change, or development reasonably likely to involve a material change in the affairs, conditions and prospects of Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor or in any statement of fact or information contained in this Whitepaper since the date hereof. The distribution or dissemination of this Whitepaper or any part thereof may be prohibited or restricted by the laws, regulatory requirements and rules of any jurisdiction. In the case where any restriction applies, you are to

inform yourself about, and to observe, any restrictions which are applicable to your possession of this Whitepaper or such part thereof (as the case may be) at your own expense and without liability to Quarktech Ltd, QuarkChain Inc., QuarkChain Foundation Ltd and/or any companies or entities so associated directly or indirectly with Quarktech Ltd and/or the Distributor. Persons to whom a copy of this Whitepaper has been distributed or disseminated, provided access to or who otherwise have the Whitepaper in their possession shall not circulate it to any other persons, reproduce or otherwise distribute this Whitepaper or any information contained herein for any purpose whatsoever nor permit or cause the same to occur.